WASHINGTON — Democratic presidential candidate Elizabeth Warren wants to relieve student debt for 42 million people — an estimated $640 billion in loans held by mainly middle- and lower-income Americans.
The Massachusetts senator and the House majority whip, Rep. James Clyburn (D-S.C.), introduced the Student Loan Debt Relief Act on Tuesday. The bill would eliminate student debt entirely for 75% of borrowers and partially for another 20% of borrowers.
“[Student loan] debt not only affects the people who try to carry it ― it affects our entire economy,” Warren said at a press conference. “Finding a way to cancel a big chunk of that student loan debt means freeing up young people to do more.”
The proposed legislation only addresses existing student debt, not the rising cost of higher education or predatory for-profit colleges, although both Democratic lawmakers aim to address those issues in other legislation. It’s also unlikely to pass the Republican-controlled Senate or be signed by President Donald Trump. But the bill does offer another look at how Warren aims to reshape the education system if she becomes president.
The goal of this legislation is to make it easier to cancel both private and federal loan debt, as well as to take considerable steps toward closing the racial wealth gap, Warren and Clyburn said on Tuesday.
Tuition prices have doubled for private universities and tripled for public universities since the 1980s, according to a 2017 report by the College Board, which administers standardized placement tests. The rising prices and an increase in the number of those attending college caused student borrowing ― and student debt ― to skyrocket over the last decade. Forbes reported in April that $1.56 trillion in student loans is owed by 44.7 million Americans. That’s more than Americans’ total outstanding credit card debt or auto loans.
Clyburn said he was shocked when he heard that statistic. “That is something that should not be,” he said.
A college education should be a “springboard” for students, the congressman said. “Today, it seems to be an anchor around their necks, when it comes to trying to fulfill their dreams and aspirations.”
The legislation from Warren and Clyburn would automatically cancel up to $50,000 in student loan debt for individuals with a household income of $100,000 or less, based on data already available to the federal government. Student borrowers with private loans would be able to take advantage of the loan cancellation program by refinancing and converting their debt into federal student loans.
Warren and Clyburn propose a yearlong freeze on loan payments, wage garnishment and interest accrual on student loans while the debt cancellation is being implemented. Their legislation would also bar the government from treating canceled debt as taxable income.
The plan could be funded by several means, Warren said, including a two-cent wealth tax on fortunes over $50 million. The so-called “Ultra-Millionaire Tax” is also part of her presidential campaign platform. She said the tax would provide enough money to pay for student loan debt elimination, as well as several other programs like universal child care and tuition-free college.
Warren and Clyburn hope to “iron out any kinks” while the bill is in the Democrat-controlled House, she said, in preparation for a less Republican Senate and a Democratic president in the future.
This issue is personal, Warren said. She first called for a massive cancellation of student loan debt ― and advocated for free public college ― back in April. But she has been working to reduce student debt since she got to Capitol Hill. Warren’s first bill in Congress proposed lower interest rates for federal student loans.
Fellow 2020 candidate Sen. Bernie Sanders (I-Vt.) has also proposed a plan to cancel student loan debt, but he takes it a step further. While Warren’s bill focuses on eliminating debt for mostly middle- and lower-income borrowers, Sanders’ plan would wipe out all existing student debt.
The plan from Warren and Clyburn has income caps because they are aiming not just to relieve student debt but to close the racial wealth gap, they said. “The numbers we picked are the numbers that do that best,” Warren said. “They get the maximum help to the people who will help close that black-white wealth gap.”
Clyburn made it clear that their efforts to tackle the problems of higher education start with this bill, but won’t end with it. The lawmakers said they have separate plans to address the affordability of college and other issues affecting future students.
“I believe very strongly that we have got to erase this cancer that is growing on the lives of our young people,” Clyburn said. “That must be done.”
Several prominent organizations — including the American Federation of Teachers, the Southern Poverty Law Center, the National Association of Consumer Bankruptcy Attorneys and Americans for Financial Reform — have already come out in support of the new legislation.
“This bill would release millions of borrowers from their ‘debt sentence’ so they can live their lives, care for their families and have a fair shot at the American dream,” American Federation of Teachers president Randi Weingarten said in a statement.
This article originally appeared on HuffPost.